Earlier this year, an employee working for the city of Denver identified more than $45,000 (£29,000) in savings when she suggested cheaper postage for the 10,000 letters sent to customers. It is small innovations like this that have the greatest impact over time.

The local government employee was encouraged to come up with this money saving idea during their participation at the Peak Academy, Denver's first ever innovation school.

In 2011, the the Peak Academy was launched to create a culture of innovation among city employees. The belief is that to provide the highest quality services at the lowest possible cost, managers and frontline staff must share ideas .

At the academy, city employees receive training, develop ideas and support for new approaches. Managers nominate staff to take part in five-day training sessions where they'll learn performance measurement skills, and there are incentives for senior managers to support the work of academy graduates.

The overall aim is for staff to become innovators, changing the way we operate to deliver better services. Today, more than 10% of the city's employees have been through the academy, and their work alone has identified more than $6.8m in savings for the city.

This approach has many benefits, including the chance for workers to see their ideas being implemented, which will bring value when future staff retire.

In a climate where morale is low and local government staff are asked to do more with less, initiatives such as this bring people together — whatever their job title or role. This training means employees are more engaged because they are more empowered, which in turn improves the service they offer to the people of Denver. Seeing the positive impact of the training, other employees are also jumping in headfirst.

Some lessons from the Peak Academy:

• Too often, a workforce equates innovation with technology. We call this the "specialisation barrier". This means only technology workers are responsible for innovation, taking most of our resources off the table. What's the antidote? Take technology off the table and teach employees to streamline processes and eliminate waste.

• Many offices have an underlying desire to level the playing field, which we call the "lowest common denominator barrier". Often, the most reluctant or ill-equipped part of the organisation will receive the majority of the innovation resources. The answer is to flip the table, throwing almost everything at the top performers and letting the rest catch up. This strategy works especially well if the achievers are celebrated and rewarded.

• Decision-makers tend to like familiar solutions. For example, if $5m of additional police officers will reduce crime by 5%, and $1m of free recreation centres will accomplish the same thing, usually the leadership will choose the old-fashioned way, which we call the "traditional barrier". We have found that the only remedy is communicating the lost opportunity of the more expensive option and the repercussions of having fewer resources for other priorities.

• Over-reliance on the best practice barrier is seen as a way to mitigate risk. If others are doing it, it must be the right thing to do. But if we all copied each other, we would simply gravitate to the average; and that's not innovation.

Michael B Hancock is mayor of Denver.

• What do you think? Email sarah.marsh@guardian.co.uk if you want to contribute an article to this debate

Not already a member? Join us now for more comment, analysis and the latest job opportunities in local government.